Think about how remarriage affects your retirement planning. Some divorce settlements require retirement benefits to be split with an ex-spouse, which could reduce your income in retirement. If you worked for the federal government, city, or county while you were married in a community property state, the spouse that you were married to during that time period will likely have a pension benefit due to them. I have seen several clients go through this and they were completely unaware of this when they started the retirement process. In the event of your death, your current spouse might have to split survivor benefits with your ex-spouse. Social Security benefits can also be affected. For example, if you are entitled to spousal or survivor’s Social Security benefits from a previous marriage, getting remarried might affect how much you are entitled to collect. You are in fact entitled to your benefit or your spousal benefit if you were married for longer than ten years (whichever is greater not both at once). If your spousal benefit is higher, and you then remarry, you lose the ability to claim that spousal benefit. You can only claim the spousal benefit of your current spouse at that time. Discuss these issues with your spouse and financial adviser to make sure that your retirement takes into consideration your change in financial circumstances. You can consult with social security and/or let us do a social security maximization plan for you. Also, if you are approaching retirement and are divorced, never hesitate to talk to HR to ensure that your ex-spouse will not be entitled to your benefits or reduce your benefits in any way. Better to know then to be surprised.
Consider drafting a prenuptial (or postnuptial) agreement. Most Americans get married without a prenuptial agreement. If this is a second or third marriage, in many cases, one or both spouses will have children from a previous marriage or have significant debts and assets. When developed by an experienced attorney, a financial agreement can help you protect yourselves and your heirs from the financial fallout of a divorce. Something as simple as a separate property trust, which can be used to also protect inheritance can be used as an instrument to protect your assets. You should definitely consult an attorney on your options and be careful to not co-mingle assets until you do so. I have several referrals that I can provide.
Discuss estate planning with your investment adviser and attorney. Estate planning can be emotionally and logistically complex in blended families and it’s important to make sure that you and your spouse update your estate plans. It’s essential to discuss your estate plans if you want to make sure your children inherit rather than your current spouse or your spouse’s children. Sometimes it is better to talk through this with your financial adviser as they can see how the assets are structured and talk more about what you may expect to pass along at the end of your life. Knowing what you expect to pass along if you were to live to a normal age will help the conversation with your attorney and your new blended family.
Remarrying later in life is wonderful, but a new marriage can introduce many complex financial considerations. I strongly recommend discussing these issues with your spouse as early as possible to ensure that your financial health is protected and to help lay the groundwork for future conversations about money.
It’s also a good idea to speak with your financial planner and an attorney so that they can help you understand how your finances and legal situation will be affected by your marriage. If you have any questions about marital finances or any other issues surrounding blended families, please give me a call. I’m always happy to be a resource to you and those you love.
Footnotes, disclosures, and sources:
These are the views of Windus Fernandez Brinkkord and Michael Gilbert and not necessarily those of National Planning Corporation or Trilogy Financial Services and should not be construed as investment advice. Neither National Planning Corporation, Trilogy Financial Services, Windus Fernandez Brinkkord nor Michael Gilbert gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.
We have not independently verified the information available through the following links. The links are provided to you as a matter of interest. We make no claim as to their accuracy or reliability.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
Securities and Advisory Services offered through NATIONAL PLANNING CORPORATION (NPC), Member FINRA, SIPC, Registered Investment Adviser. Trilogy Financial Services, Inc. and NPC are separate and unrelated entities.
About Your Columnist
Windus Fernandez Brinkkord is a featured columnist for Women Taking Charge, the official blog of Connected Women of Influence, where she covers the intersection of women in business and managing their investments and taking charge of their financial future. Currently, Windus is Senior Vice President of Investments with Trilogy Financial Services, a financial services company that focuses on helping business owners and individuals build and manage wealth.